Final Results
Jupiter European Opportunities trust Plc
Annual Financial Report for the year ended 31 May 2011
The following is an extract from the Company's Annual Report and Accounts for
the year ended 31 May 2011. The full Annual Report will shortly be available to
be viewed on or downloaded from the Company's website at
www.jupiteronline.co.uk.
CHAIRMAN'S STATEMENT
Performance
I am pleased to report another successful year for your Company. Net asset value
per share rose from 232.4p to 316.7p, an increase of 36.3 per cent. The discount
- the difference between the price of our shares and their (higher) net asset
value, halved from 16.8 to 8.4 per cent, thanks to strong performance, energetic
marketing and the policy of active discount management to which I referred in my
Statement a year ago. As a result the price of your shares appreciated by no
less than 50.1 per cent. You will, I am sure, feel that our Managers have earned
the performance fee of £4.24 million which has accrued to them in respect of the
year under review, given that our benchmark (the FTSE World Europe ex UK Index)
went up by just 24.2 per cent. As a matter of interest the FTSE All-Share Index,
whence some 15 per cent. of the portfolio is represented, rose by just under 16
per cent. over the same period, so that the Europe ex UK Index was a hard one to
beat given our exposure to the United Kingdom stock market.
Dividend
Once again our investment income has risen substantially, from £5.88 million to
£8.90 million. Even after paying a higher investment management fee (higher,
because total assets rose, and the fee is calculated on an ad valorem basis)
plus the performance fee, but with lower borrowing costs, net distributable
income has jumped from £2.84 million to £5.46 million. Out of this latter sum,
which equates to 6.8p per share, your Directors announced on 12 August 2011 the
payment of an interim dividend of 5.3p per share, which compares with 2.1p per
share a year ago. There is no guarantee that this dividend will be repeated next
year as your Company is managed on a total return basis, and in the original
Prospectus it was stated that there would be no dividend; it is generally
expected that company dividends will increase further this year.
Gearing
Net borrowings rose over the year from £27.0 million to £32.0 million, but total
assets rose too, so our gearing ratio rose marginally from 12 to 13 per cent.
This is a level with which our Investment Manager, Alexander Darwall, feels
comfortable. None of us wish to live through a period where we go into a bear
market with what - with the great advantage of hindsight - turns out to be an
excessively geared investment portfolio.
Throughout the year your Company's borrowings were wholly denominated in
sterling, which weakened against the euro, to the benefit of both the income and
capital accounts of your Company.
On 5 September 2011 your Company's existing £60 million loan facility is due to
expire. The board has been seeking an alternative to your Company's loan
facility and have agreed, in principal, the terms of a new 364 day revolving
credit facility with Scotia Europe plc.
Discount Management
We stated a year ago that we were taking a more dynamic approach to managing the
discount at which your Company's shares trade. Rather than set a declared limit
(say 10 per cent.) above which we would automatically buy in shares, either for
treasury (and possibly subsequent reissue) or for cancellation, we felt it best
to use our firepower on an ad hoc basis. As it happens, we did not need to buy
in any shares during the year under review, and thanks to an active marketing
programme (and to excellent performance) the discount halved in any case, but we
have plenty of powder left in our magazine should the need arise, and we will
not hesitate to use it if, in our view, existing shareholders will benefit. Nor
did we issue any new shares, which we would only have done at a premium to net
asset value.
The Board
Jack Robinson, who has been a member of your Company's Board since its
inception, as well as having been a Director of its predecessor Company, retires
at the Annual General Meeting. Jack has been an inspirational Board member,
never hesitating to challenge our investment managers (but always politely) and,
being based in Boston (Massachusetts), bringing an American angle to our
discussions. He will continue to have an ongoing relationship with Jupiter Asset
Management. We are now engaged in the difficult task of finding a replacement
for Jack. Meanwhile we wish him every success with his various "green" projects.
Continuation Vote
At the Annual General Meeting on 10 October an Ordinary Resolution will be
proposed to the effect that the Company will continue in existence as an
investment trust. Should the Resolution be passed, a similar Ordinary Resolution
will be proposed at the 2014 Annual General Meeting and at every third such
occasion thereafter. Your Directors urge you to vote on this Resolution, ideally
in favour.
Outlook
In recent months, as first Ireland, then Portugal and Greece, have been bailed
out by their European partners - and others - rather than be allowed to default
(with potentially damaging consequences for the euro and the Eurozone), many
column inches have been devoted to whether or not the European Community and its
currency will survive, and if so, in what form. History tells us that currency
unions have been tried before. In Europe we had the Snake, the European Monetary
System (EMS), and the Exchange Rate Mechanism (ERM) - where are they now? By
contrast Bismarck founded the Reichsbank in 1875 to provide a common currency
across all the German states, and his creation survived hyperinflation and two
world wars and became the stolid and trustworthy Bundesbank - but thereafter
Germany adopted the euro. The CFA franc zone, which includes the former French
colonies of West and Central Africa, started life in 1945 and still exists. By
contrast the Latin Monetary Union (LMU), another French initiative covering
France, Belgium, Italy, Greece and Bulgaria, lasted for much of the nineteenth
century but failed when some members, notably the Papal State, began to debase
their currency.
Your Company has in general eschewed investment in the weakest of the European
periphery members, and will continue to invest in outstanding companies with
worldwide franchises and first-class managements, as it has done successfully
hitherto.
H.M. Priestley
Chairman
18 August 2011
MANAGER'S REVIEW
The Net Asset Value of the Company's Ordinary shares rose by 36.3 per cent.
during the twelve months to 31 May 2011. This compares with a 24.2 per cent.
rise, in sterling, of the FTSE World Europe ex UK index.
The FTSE World (total return) index rose by 13.9 per cent. in sterling. Â The
Company's benchmark, the FTSE World Europe ex UK Total Return index rose by
24.2 per cent. The MSCI Latin America index was up 8.1 per cent.; the MSCI AC
Asia ex-Japan index was up 15.6 per cent. According the IMF, Developing Asia (26
countries including China and India) grew by 9.6 per cent. in 2010; further
growth of 8.4 per cent. is forecast in 2011 and again in 2012. Latin America
maintained its impressive growth record: the IMF expects the Brazilian economy
to grow at 4.1 per cent. in 2011 and by a further 3.6 per cent. in 2012. It is,
at first sight, extraordinary that the better performing economies (economies
which exceeded in almost every case the IMF's earlier growth predictions) had
underperforming stock markets. Europe's underperforming economies, on the other
hand, had outperforming stock markets; the well documented travails of the euro
and the sovereign debt markets belie the health of corporate Europe. Â It is a
reminder that the correlation between national economic growth and stock market
performance is, certainly in the short term, a poor one. There are many
distortions between broad economic growth and shareholder returns. The split of
profits between capital (and the various vested interests), labour and the state
is crucial. Moreover, quoted companies derive proportionally more earnings from
international operations than ever before meaning that local GDP performance is
a commensurately weaker indicator of corporate profits. The good performance of
European stock markets reflects strong international operations, as much as
committed cost-cutting, and lower corporate tax rates (in the UK). Furthermore,
to generalise, European companies continue to increase their value added.
The main reason for the strong equity markets performance was ongoing government
and central bank policies which have kept interest rates at historically low
levels. (The European Central Bank's refinancing rate is 1.25 per cent.). This
is the Continental European equivalent of the Anglo-Saxons' QE (quantitative
easing) policy and helped stimulate economic growth. According to the IMF, after
1.8 per cent. growth in the European Union economy in 2010, a further expansion
of 2.0 per cent. and 2.1 per cent. for 2011 and 2012 respectively can be
expected. Low interest rates also underpinned attractive valuations for
equities. Strong companies did not only enjoy relatively cheap capital costs:
there were two other important drivers of corporate profitability. First, many
European companies were able to tap into the continuing robust economic growth
in the large developing economies. Second, European companies showed an
admirable ability to cut costs. The upshot of these factors was that margins
widened. European companies' profits are expected to advance again in 2011.
 Brokers estimate that European corporate earnings should increase by 10.7 per
cent. this year and by a further 14.8 per cent. in 2012.
Your Company's relatively good performance was due to a combination of stock
picking and gearing. The level of the Company's borrowings increased to £32
million from £27 million over the period under review.  These borrowings,
representing 12.8 per cent. of net assets at year end, improved returns.
The largest single contributor to performance was the holding in Croda. British
based, Croda operates across the world selling its specialist (mainly
oleochemical) chemical products. The company's value-added focus has served it
well. NovoNordisk (the world's leading manufacturer of insulin drugs) was,
again, a significant contributor to returns. Diabetes is a global pandemic;
NovoNordisk's best-in-class drugs therefore have global and growing appeal.
Novozymes (the world leader in industrial enzymes), too, is a perennial
contributor to returns. Higher energy costs indirectly drive demand for their
products in their many and diverse markets. Other stocks that made the biggest
positive contribution to performance included Johnson Matthey, the UK listed
manufacturer of catalysts, pharmaceutical materials and pollution control
systems. Its global reach was an important factor in capturing strong demand for
their products in the automotive and energy sectors. In addition, Wirecard
(internet payment and processing services), DNB (Norwegian bank) and Tomra
(recycling and sorting technology) all helped improve returns. Whilst it should
be noted that our patience with previous 'underperformers' (notably Syngenta and
Reed Elsevier) has been rewarded with a marked improvement in their fortunes,
the same can not be said of Neopost. The lack of positive news flow is
disappointing, but we believe that further patience will be rewarded. Three
other stocks in the portfolio stand out as 'drags' on performance: Inmarsat,
Oriflame, and Kudelski. Inmarsat, the world's leading provider of global mobile
satellite communications, has faced tougher competition. We believe that their
initiatives will, in due course, pay off. Oriflame continues to make progress
albeit at a slower pace than formerly. Shares in Kudelski, the Swiss-listed TV
encryption technology company, were weak suffering from the perception that new
media models, notably 'Over The Top TV', represent a fundamental threat to their
prospects. We are yet to be convinced of this so maintain the position.
There were a number of outright sales. The Halfords position was sold as profits
failed to meet our expectations. This remains, in our view, a good quality
business but trading conditions are challenging. The sale of the shares held in
BioMerieux was prompted by signs that their markets had deteriorated slightly in
the wake of the US healthcare reform. The challenge of their American business
was, too, the reason for selling the holding in Coloplast. This is another
excellent company but one struggling now with the challenge of growing its US
business. We also sold the position in Ryanair. There is a concern that the
business model is maturing which, together with weaker economic growth, will
make progress more difficult to achieve. Other positions, such as those in
Croda, Vopak and DNB, were reduced on valuation grounds. Shares in Neopost were
sold for portfolio management reasons.
Of new additions to the portfolio the most important is Marine Harvest, the
leading Norwegian salmon farmer. Demand for farmed salmon has been remarkably
resilient; this, together with natural supply constraints, underpins our view
that Marine Harvest enjoys good prospects. Â Another notable new investment is
that of Edenred, the world's leading, French-based, vouchers business. This is a
well established business which is now a separate, listed company. It appears to
have many growth opportunities in many different countries, a prospect which is
not fully reflected in the valuation. The other significant fresh investment is
Pearson, publisher of the Financial Times and leading publisher of educational
material. The company should be a significant beneficiary of the widespread
migration to digital testing and assessment methods.
The holding in Tomra was increased. This is an example of a company that
exemplifies well the attractive business characteristics that meet our
investment criteria: a strong core business (the leader in the sale of reverse
vending machines) with reliable recurrent demand; proven, leading,
differentiated 'sorting' technology; and a good number of realistic ways of
using that special technology in new growth areas.
Outlook
The aspect of the outlook where greatest confidence is justified is the
commitment to continue to manage the portfolio in the same, consistent fashion:
identifying 'special' companies with superior, differentiated products or
services; companies which enjoy a structural advantage and the reasonable
prospect of long term growth. The 'macro' outlook, on the other hand, depends to
a great extent on the trend towards more trade, globalisation and productivity.
This is the best way to mitigate the impact of high debt levels in the West. We
approach this issue with vigilance rather than confidence. It is sensible to be
optimistic on this point for now, but the protectionist pressures (in their many
and varied forms) will mount. Nevertheless, we continue to see compelling
investment opportunities. We remain confident that our investment approach is an
appropriate one for current circumstances.
Alex Darwall
Jupiter Asset Management Limited
18 August 2011
OBJECTIVE
The objective of the Company is to invest in securities of European companies
and in sectors or geographical areas which are considered by the investment
manager to offer good prospects for capital growth, taking into account economic
trends and business development.
INVESTMENT POLICY
The Investment Manager adopts a stock picking approach in the belief that a
thorough analysis and understanding of a company is the best way to identify
long-term superior growth prospects. This understanding begins with identifying
those companies where the ownership structure and incumbent management are
conducive to the realisation of the aim of achieving superior long-term earnings
growth. The Investment Manager will seek to identify companies which enjoy
certain key business characteristics including some or all of the following:
· a strong management record and team, and the confidence that the Investment
Manager has in that management's ability to explain and account for its actions;
· proprietary technology and other factors which indicate a sustainable
competitive advantage;
· a reasonable expectation that demand for their products or services will enjoy
long-term growth; and
· an understanding that structural changes are likely to benefit rather than
negatively impact that company's prospects.
There may be sectors which do not enjoy the business characteristics described
above and in such circumstances the Investment Manager will seek to identify
companies that are expected to generate superior earnings growth within that
sector. Â In analysing potential investments, the Investment Manager will employ
differing valuation techniques depending on their relevance to the business
characteristics of a particular company. However, the underlying feature will be
the sustainability and growth of free cashflow in the long-term.
Any material change in the investment policy of the Company described above may
only be made with the approval of Shareholders by an ordinary resolution.
RISKS AND UNCERTAINTIES
The principal risk factors that may affect the Company and its business can be
divided into the following areas:
Investment strategy and share Price Movements - The Company is exposed to the
effect of variations in the price of its investments. A fall in the value of its
portfolio will have an adverse effect on shareholders' funds. It is not the aim
of the Board to eliminate entirely the risk of capital loss, rather it is its
aim to seek capital growth. The Board reviews the Company's investment strategy
and the risk of adverse share price movements at its quarterly board meetings
taking into account the economic climate, market conditions and other factors
that may have an effect on the sectors in which the Company invests. There can
be no assurances that appreciation in the value of the Company's investments
will occur but the Board seeks to reduce this risk.
Foreign Currency Movements - The Company has exposure to foreign currency
through its overseas investments. The Board considers carefully factors which
may affect the foreign currency in which the Company has an exposure at its
quarterly board meetings taking into account the economic and political climate
of various regions and the prospects for sterling.
Interest Rates - The Company has exposure to cash which generates interest
through interest bearing accounts. The Board is mindful of interest rates when
setting limits on the Company's exposure to cash.
Derivatives - The Company invests in derivatives from time to time. Â Derivatives
may be a riskier investment than equities as they can exaggerate the return that
can be achieved than investing directly in equities. The Board has set limits on
the amount of exposure the Company has to derivatives and it reviews these
limits at its quarterly board meetings.
Liquidity Risk - This risk can be viewed as the liquidity of the securities in
which the Company invests and the liquidity of the Company's shares. The Company
may invest in securities that have a very limited market which will affect the
ability of the Company's fund manager to dispose of securities when he no longer
feels they offer the potential for future returns. Likewise the Company's shares
may experience liquidity problems when shareholders are unable to realise their
investment in the Company because there is a lack of demand for the Company's
shares. At its quarterly meetings the Board considers the current liquidity in
the Company's investments when setting restrictions on the Company's exposure.
The Board also reviews on a quarterly basis the Company's buy back programme and
in doing so it is mindful of the liquidity in the Company's shares. In addition,
the Board seeks the advice of the Company's brokers, Cenkos, who give advice on
ways in which the Board can influence the liquidity in the Company's shares.
Gearing Risk - The Company's gearing can impact the Company's performance by
accelerating the decline in value of the Company's total assets at a time when
the Company's portfolio is declining. Conversely gearing can have the effect of
accelerating the increase in the value of the Company's total assets at a time
when the Company's portfolio is rising. The Company's level of gearing is under
constant review by the Board who take into account the economic environment and
turbulent market conditions when setting the level.
Discount to net asset Value - A discount in the price at which the Company's
shares trade to Net Asset Value would mean that shareholders would be unable to
realise the true underlying value of their investment. As a means of controlling
the discount to Net Asset Value the board has established a buy back programme
which is under constant review as market conditions change.
Regulatory Risk - The Company operates in a complex regulatory environment and
faces a number of regulatory risks. A breach of section 1158 of the Corporation
Tax Act 2010 could result in the Company being subject to capital gains on
portfolio movements. Breaches of other regulations such as the UKLA listing
rules, could lead to a number of detrimental outcomes and reputational damage.
Breaches of controls by service providers such as the Manager could
also lead to reputational damage or loss.
Loss of Key Personnel - The day-to-day management of the Company has been
delegated to the Investment Manager. The person at Jupiter Asset Management
Limited who manages the assets of the Company on a daily basis is Alexander
Darwall. Loss of the Manager's key staff members could affect investment return.
The Manager develops its recruitment and remuneration packages in order to
retain key staff, has training and development programmes in place and
undertakes succession planning.
Operational - failure of the Manager's core accounting systems, or a disastrous
disruption to its business, could lead to an inability to provide accurate
reporting and monitoring. The Manager is contractually obliged to ensure that
its conduct of business conforms to applicable laws and regulations. The Manager
has confirmed that reliable back-up systems are in place.
Financial - inadequate financial controls could result in misappropriation of
assets, loss of income and debtor receipts and inaccurate reporting of Net Asset
Value per share. The Board annually reviews the Manager's statements on its
internal controls and procedures.
Consolidated Statement of Comprehensive Income for the year ended 31 May 2011
--------------------------------------------------------------------------------
  31 May 2011 31 May 2010
 Revenue Capital  Revenue Capital
 Return Return Total Return Return Total
 £'000 £'000 £'000 £'000 £'000 £'000
Gains  on  investments at fair
value - 67,971 67,971 - 54,676 54,676
through profit or loss
Foreign exchange losses on loans - - - - (869) (869)
Other exchange gain / (loss) 89 (209) (120) 201 390 591
Investment income 8,810 - 8,810 5,248 - 5,248
Other income 2 - 2 14 - 14
Dealing profits of subsidiary - - - 411 - 411
Foreign exchange gain by - - Â 7 - 7
subsidiary
--------------------------------------------------------------------------------
Total income 8,901 67,762 76,663 5,881 54,197 60,078
--------------------------------------------------------------------------------
Investment management fee (1,910) - (1,910) (1,548) - (1,548)
Investment performance fee - (4,237) (4,237) - - -
Other expenses (477) - (477) (396) - (396)
--------------------------------------------------------------------------------
Total expenses (2,387) (4,237) (6,624) (1,944) - (1,944)
--------------------------------------------------------------------------------
Return before finance costs and 6,514 63,525 70,039 3,937 54,197 58,134
tax
Finance costs (354) - (354) (512) - (512)
--------------------------------------------------------------------------------
Return before taxation 6,160 63,525 69,685 3,425 54,197 57,622
Taxation (700) - (700) (587) - (587)
--------------------------------------------------------------------------------
Return after taxation 5,460 63,525 68,985 2,838 54,197 57,035
--------------------------------------------------------------------------------
Return per Ordinary share 6.84p 79.58p 86.42p 3.52p 67.15p 70.67p
--------------------------------------------------------------------------------
The total column of this statement is the statement of comprehensive income of
the Group prepared in accordance with IFRS. The supplementary revenue return and
capital return columns are both prepared under guidance published by the
Association of Investment Companies ('AIC').
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the year.
Consolidated Statement of Financial Position as at 31 May 2011
-----------------------------------------------------------------------------
 2011 2010
 £'000 £'000
Non current assets
Investments held at fair value through profit or loss
290,438 210,972
-----------------------------------------------------------------------------
Current assets
Receivables 2,238 1,493
Cash at bank 488 1,233
-----------------------------------------------------------------------------
 2,726 2,726
-----------------------------------------------------------------------------
Total assets 293,164 213,698
Current liabilities (40,351) (28,194)
-----------------------------------------------------------------------------
Total assets less current liabilities 252,813 185,504
-----------------------------------------------------------------------------
Capital and reserves
Called up share capital 798 798
Share premium 41,286 41,286
Special reserve 34,376 34,376
Capital redemption reserve 42 42
Retained earnings 176,311 109,002
-----------------------------------------------------------------------------
Total equity 252,813 185,504
-----------------------------------------------------------------------------
Net Asset Value per Ordinary share 316.73p 232.40p
-----------------------------------------------------------------------------
Company Statement of Financial Position as at 31 May 2011
-----------------------------------------------------------------------------
 2011 2010
 £'000 £'000
Non current assets
Investments held at fair value through profit or loss
290,438 210,972
-----------------------------------------------------------------------------
Current assets
Receivables 2,238 1,493
Cash at bank 488 1,233
-----------------------------------------------------------------------------
 2,726 2,726
-----------------------------------------------------------------------------
Total assets 293,164 213,698
Current liabilities (43,882) (31,725)
-----------------------------------------------------------------------------
Total assets less current liabilities 249,282 181,973
-----------------------------------------------------------------------------
Capital and reserves
Called up share capital 798 798
Share premium 41,286 41,286
Special reserve 34,376 34,376
Capital redemption reserve 42 42
Retained earnings 172,780 105,471
-----------------------------------------------------------------------------
Total equity 249,282 181,973
-----------------------------------------------------------------------------
Consolidated Statement of Changes in Equity
--------------------------------------------------------------------------------
    Capital
 Share Share Special Redemption Retained
For the year ended 31 May Capital Premium Reserve Reserve Earnings Total
2011
 £'000 £'000 £'000 £'000 £'000 £'000
31 May 2010 798 41,286 34,376 42 109,002 185,504
Net profit for the year - - - - 68,985 68,985
Dividends paid and declared - - - - (1,676) (1,676)
--------------------------------------------------------------------------------
Balance at 31 May 2011 798 41,286 34,376 42 176,311 252,813
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    Capital
 Share Share Special Redemption Retained
For the year ended 31 May Capital Premium Reserve Reserve Earnings Total
2010
 £'000 £'000 £'000 £'000 £'000 £'000
31 May 2009 810 41,286 36,676 30 52,655 131,457
Net profit for the year - - - - 57,035 57,035
Ordinary share cancellation (12) - (2,300) 12 - (2,300)
Dividends paid and declared - - - - (688) (688)
--------------------------------------------------------------------------------
Balance at 31 May 2010 798 41,286 34,376 42 109,002 185,504
--------------------------------------------------------------------------------
Company Statement of Changes in Equity
--------------------------------------------------------------------------------
    Capital
 Share Share Special Redemption Retained
For the year ended 31 May Capital Premium Reserve Reserve Earnings Total
2011
 £'000 £'000 £'000 £'000 £'000 £'000
31 May 2010 798 41,286 34,376 42 105,471 181,973
Net profit for the year - - - - 68,985 68,985
Dividends paid and declared     (1,676) (1,676)
--------------------------------------------------------------------------------
Balance at 31 May 2011 798 41,286 34,376 42 172,780 249,282
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
    Capital
 Share Share Special Redemption Retained
For the year ended 31 May Capital Premium Reserve Reserve Earnings Total
2010
 £'000 £'000 £'000 £'000 £'000 £'000
31 May 2009 810 41,286 36,676 30 49,543 128,345
Net profit for the year - - - - 56,616 56,616
Ordinary share cancellation (12) - (2,300) 12 - (2,300)
Dividends paid and declared - - - - (688) (688)
--------------------------------------------------------------------------------
Balance at 31 May 2010 798 41,286 34,376 42 105,471 181,973
--------------------------------------------------------------------------------
Consolidated Cash Flow Statement for the year ended 31 May 2011
--------------------------------------------------------------------------------
 2011 2010
 £'000 £'000
Cash flows from operating activities
Purchases of investments (58,320) (71,270)
Sales of investments 49,455 88,398
Realised (loss) / gain on foreign currency (120) 598
Investment income received 8,538 5,209
Interest received 1 15
Other cash receipts - 411
Investment management fee paid (1,257) (1,487)
Other cash expenses (400) (397)
--------------------------------------------------------------------------------
Cash (outflow) / inflow from operating activities before
finance costs and taxation (2,103) 21,477
Finance costs paid (353) (621)
Taxation paid (1,613) (358)
--------------------------------------------------------------------------------
Net cash (outflow) / inflow from operating activities
(4,069) 20,498
Financing activities
Ordinary shares cancelled - (2,300)
Dividend paid (1,676) (688)
Short term loans received 113,000 142,197
Short term loans repaid (108,000) (164,754)
--------------------------------------------------------------------------------
Decrease in cash (745) (5,047)
Cash and cash equivalents at start of year 1,233 6,280
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year 488 1,233
--------------------------------------------------------------------------------
Company Cash Flow Statement for the year ended 31 May 2011
--------------------------------------------------------------------------------
 2011 2010
 £'000 £'000
Cash flows from operating activities
Purchases of investments (58,320) (71,270)
Sales of investments 49,455 88,398
Realised (loss) / gain on foreign currency (120) 591
Investment income received 8,538 5,209
Interest received 1 14
Investment management fee paid (1,257) (1,487)
Other cash expenses (400) (397)
--------------------------------------------------------------------------------
Cash (outflow) / inflow from operating  activities before
finance costs and taxation (2,103) 21,058
Finance costs (353) (621)
Taxation (1,613) (403)
--------------------------------------------------------------------------------
Net cash (outflow) / inflow from operating activities (4,069) 20,034
Financing activities
Ordinary shares cancelled - (2,300)
Dividend paid (1,676) (688)
Short term loans received 113,000 142,197
Short term loans repaid (108,000) (164,754)
Cash received from subsidiary - 464
--------------------------------------------------------------------------------
Decrease in cash (745) (5,047)
Cash and cash equivalents at start of year 1,233 6,280
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year 488 1,233
--------------------------------------------------------------------------------
NOTES:
1. Income
---------------------------------------------------------
  2011  2010
Group Group
£'000 £'000
Income from investments
Dividends from United Kingdom companies 1,585 1,300
Dividends from overseas companies 7,225 3,948
---------------------------------------------------------
 8,810 5,248
---------------------------------------------------------
Other income
Deposit interest 2 14
Foreign exchange gains 89 201
Profit on dealings by subsidiary - 411
Foreign exchange gains by subsidiary - 7
---------------------------------------------------------
 91 633
---------------------------------------------------------
Total income 8,901 5,881
---------------------------------------------------------
Total income comprises
Dividends 8,810 5,248
Interest 2 14
Other income 89 619
---------------------------------------------------------
 8,901 5,881
---------------------------------------------------------
Income from investments
Listed in the UK 1,819 1,300
Listed overseas 6,991 3,948
---------------------------------------------------------
 8,810 5,248
---------------------------------------------------------
2 Reconciliation of profit before finance costs and taxation to net cash inflow
from operating activities
 2011 2010
 Group Group
 £'000 £'000
Net return before finance costs and taxation 70,039 58,134
Gain on non current asset investments (67,971) (54,676)
Foreign exchange loss on loans - 869
Purchases of non current asset investments (58,320) (71,270)
Sales of non current asset investments 49,455 88,398
Increase in prepayments and accrued income (277) (37)
Increase in other creditors and accruals 4,971 59
--------------------------------------------------------------------------------
Net cash (outflow) / inflow from operating  activities  before (2,103) 21,477
interest and taxation
--------------------------------------------------------------------------------
3. Related parties
Mr Darwall is a Director of Jupiter Asset Management Limited. Jupiter Asset
Management Limited and Jupiter Administration Services Limited , a company
within the same group as Jupiter Asset Management Limited, receive investment
management and administration fees as set out below.
    Jupiter Asset Management Limited is contracted to provide investment
management services to the Company (subject to termination by not less than one
year's notice by either party) for a quarterly fee of 0.1875 per cent. of the
total assets of the Group, excluding the value of any Jupiter managed
investments, payable in arrears on 31 May, 31 August, 30 November and the last
calendar day of February. The Management fee for the year was £1,910,000 (2010:
£1,548,000) with £1,049,350 outstanding as at 31 May 2011 (2010: £396,152).
Jupiter Asset Management Limited is also entitled to an investment performance
fee which is based on the out-performance of the Net Asset Value per Ordinary
share over the total return on the Benchmark Index, the FTSE World Europe ex UK
total return index in an accounting period. Any performance fee payable will
equal 15 per cent. of the amount by which the increase in the Net Asset Value
per Ordinary share (plus any dividends per Ordinary share paid or payable and
any accrual for unpaid performance fees for the period) exceeds the higher of
(a) the Net Asset Value per Ordinary share on the last business day of the
previous accounting period; (b) the Net Asset Value per Ordinary share on the
last day of a period in respect of which a performance fee was last paid: and
(c) 100p. Â In each case the values of (a), (b) and (c) are increased by the
percentage by which the total return of the Benchmark Index increases or
decreases during the calculation period. Â The total amount of any performance
fee payable in respect of one accounting period is limited to 4.99 per cent. of
the Total Assets of the Company. A performance fee of £ 4,236,703 was payable
for the year ended 31 May 2011 (2010: Nil), and was outstanding at the year end.
Jupiter Administration Services Limited is contracted to provide secretarial,
accounting and administrative services to the Company for an annual fee of
£65,459 adjusted each year in line with the Retail Price Index payable quarterly
(2010: £62,284). None of the fee payable for the year ended 31 May 2011 was
outstanding at the year end (2010: Nil).
The Company has invested from time to time in funds managed by Jupiter
Investment Management Group Limited or its subsidiaries. The only such holding
as at 31 May 2011 was East European Food Fund representing 0.2 per cent. of
total investments. (2010: 0.2 per cent. of total investments).
4. Going Concern
The Articles of Association provide that at the annual general meeting of the
Company to be held this year, and at every third annual general meeting, an
ordinary resolution shall be proposed that the Company shall continue in
existence as an investment trust. The board reviewed the likelihood of the
continuation vote failing and believe that, in light of the Company's recent
strong performance and the number of shareholders who voted in favour when the
continuation vote was last put to shareholders at the Annual General Meeting
held on 23 September 2008, it was likely that the resolution would be
successfully carried.
The Company's business activities, capital structure and borrowing facilities,
together with the factors likely to affect its future development, performance
and position are set out in the Managers' Report and the Report of Directors of
the full Report and Accounts.
The Company's assets consist mainly of securities which are readily realisable,
its ongoing expenses are low relative to its net assets and therefore the
Directors consider that the Company has appropriate financial resources to
enable it to meet its day-to-day working capital requirements.
The Directors consider that the Company has adequate resources to continue in
operational existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the annual financial
statements.
5. Directors' Responsibilities For The Financial Statements
The Directors are responsible for preparing the Annual Report and financial
statements in accordance with applicable United Kingdom law and those
International Financial Reporting Standards ('IFRS') as adopted by the European
Union.
Under Company law the Directors must not approve the Group financial statements
unless they are satisfied that they present fairly the financial position of the
Company and of the Group and the financial performance and cash flows of the
Company and of the Group for that period. In preparing the Group financial
statements, the Directors are required to:
(i) select suitable accounting policies in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors and then applying them
consistently;
(ii) present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandableinformation;
(iii) provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the entity's
financial position and financial performance;
(iv) state that the Group has complied with IFRS, subject to any material
departures disclosed and explained in the financial statements; and
(v) make judgements and estimates that are reasonable and prudent.
The Directors are responsible for keeping proper accounting records that are
sufficient to show and explain the Groups transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the Group financial statements comply with the Companies Act
2006 and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website. The work carried
out by the Auditor does not include consideration of the maintenance and
integrity of the website and accordingly the Auditor accepts no responsibility
for any changes that have occurred to the financial statements when they are
presented on the website. Visitors to the website need to be aware that
legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
The Directors confirm to the best of their knowledge that:
(i) the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company, and the consolidation
taken as a whole; and
(ii) the Management Report includes a fair view of the development and
performance of the business and the position of the Company and the undertakings
included in the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that the Company faces.
So far as each of the directors are aware at the time the report is approved:
(i) There is no relevant audit information of which the Company's auditors are
not aware; and
(ii) The Directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditors are aware of that information.
By Order of the Board
H M Priestley
Chairman
18 August 2011
The annual report will be sent to all registered shareholders and copies may be
obtained from the registered office of the Company at 1 Grosvenor Place, London,
SW1X 7JJ.
The Annual General Meeting of the Company is scheduled to take place at 12.00
noon on 10 October 2011 at the Company's registered office.
By order of the Board
Jupiter Asset Management Limited
Secretaries
Enquiries:
Jenny Thompson
Jupiter Asset Management Limited
020 7412 0703
Richard Pavry
Jupiter Asset Management Limited
020 7412 0703
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Jupiter European Opportunities Trust PLC via Thomson Reuters ONE
[HUG#1539434]
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